Fannie Mae To Sell $7 Billion In 5-Year Note Tuesday

Fannie Mae (FNM) will sell a $7 billion five-year note Tuesday morning.

The note is the first of its two debt securities to be sold this month.

Market participants have said the focus is on how much of a premium investors would demand to buy the debt security.

The price talk on the new five-year note is at 93 basis points over comparable Treasurys. The spread is wider than the existing quote for Freddie Mac's (FRE) five-year note that was trading at around 75 basis points on Tuesday morning.

Foreign central banks have recently increased their holdings of agency debt. Data from the Federal Reserve last week showed a rise in foreign central bank holdings of agency debt to $817.81 billion from $806.52 billion in the prior week, the first increase in months.

In January, Fannie raised $6 billion through a three-year note, and demand from U.S. investors prompted the mortgage company to increase the size of the initial offering.

In September 2008, Fannie sold $7 billion in two-year notes.

-By Anusha Shrivastava, Dow Jones Newswires; 201-938-2371; [e-mail]

(Prabha Natarajan contributed to this report.)

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